Trai can’t fine telcos for not disclosing discounts on tariffs: TDSAT

The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) passed an interim order in which it said that until further orders, no penalty can be imposed on operators for not complying with the tariff reporting requirement to the telecom regulator

Operators are required to report any new tariffs to Trai within seven working days from the date of their implementation. Photo: Pradeep Gaur/Mint

New Delhi: Bringing temporary relief to Bharti Airtel Ltd and Idea Cellular Ltd, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) passed an interim order in which it said that until further orders, no penalty can be imposed on operators for not complying with the tariff reporting requirement to the telecom regulator.

However, the Telecom Regulatory Authority of India (Trai) is entitled to ask for details of discounts or concessions on tariffs which are offered by an operator to retain consumers, the tribunal said.

The clauses in the recent tariff order related to ‘reporting requirement’ and ‘significant market power’ were stayed by TDSAT on Tuesday.

This comes after Telecom Regulatory Authority of India on 15 March sent Airtel a show-cause notice where it pulled up the operator for failing to comply with tariff reporting requirements by not informing it about certain segmented tariffs offered to consumers to retain them.

The operator had sought interim relief from TDSAT in terms of reporting tariff requirements to the regulator.

Operators are required to report any new tariffs to Trai within seven working days from the date of their implementation after conducting a self-check to ensure the tariffs are transparent, non-discriminatory and non-predatory.

Trai issued new norms on 16 February which also require operators to transparently disclose segmented offers to retain customers on the company’s website.

Moreover, discounts, rebates and waivers when applied to a tariff would give rise to a new and distinct tariff and this would mean that the offer of a discount was effectively the offer of a new tariff, Trai rules state.

The new norms also state that in case of violation of tariff reporting requirements, an operator can be penalised Rs5,000 for every day of delay, subject to a maximum of Rs2 lakh.

While Airtel and Idea have challenged the order before TDSAT, Vodafone moved the Madras high court.

Under the new rules, Trai can examine tariffs of a significant market player (SMP)—which is an operator holding a share of at least 30% of total activity in a relevant market—to determine the existence of predatory pricing.

It will also look at whether the tariff is below the firm’s average variable cost over a certain period and whether there is evidence of a specific intent to engage in predatory pricing.

If the tariff is found predatory, an operator will be liable to pay a penalty of up to Rs50 lakh per tariff plan per telecom circle.

Incumbent operators say that the new order takes away the flexibility to compete and retain customers in a circle in which they are significant market players.

They also say that the change in Trai’s definition of “total activity” will result in an unfair advantage to Reliance Jio, which enjoys huge traffic on its network.

The new definition of “total activity” is based on any of two parameters—subscriber base and gross revenue—while an earlier definition included subscriber base, revenue, switching capacity and volume of traffic.